Data science: The next evolution for accountants?

Some of the hottest fields in business call for exactly the skills that the accounting profession offers, according to IBM’s Leon Katsnelson.

In a keynote address on artificial intelligence at CPA.com’s 2017 Digital CPA conference, held in San Francisco in early December, Katsnelson, who is director and chief technology officer for strategic partnership for data science at IBM, introduced the accountants in attendance to two of the newest professionals on the block: data scientists and data engineers. Both of those jobs are only about five years old, he said, but are already in the top ranks in terms of compensation.

“To be a data scientist, you need three things,” explained Katsnelson. First are programming skills – not necessarily full coding capabilities, but a familiarity with the field. Then comes a certain facility with statistics and math. “And you need domain experience – a deep knowledge of a business.”

it’s the last part that speaks most to the accounting profession, he explained: “Domain experience is the hardest thing to find – and that’s what accountants bring to the table. Without your skill and your knowledge, there is no data science.”

He reported that he’s seeing larger accounting firms build data science teams from the ground up, and while smaller firms may not be building their own teams, he suggested that they do need to start deepening their comprehension of the field. “You need to understand the technology to be able to select the right tools and to advise clients, because they’re struggling just like you are.”

Why information matters

One of the top reasons why data, data-related tools and the ability to work with them will matter in the future is that they all surround and relate to machine learning and artificial intelligence.

“Machine learning is like a rocket engine and data is the rocket fuel,” Katsnelson explained. “In traditional programming, we’re teaching the machine how we do the job – we’re telling it, ‘Repeat what I do.’ AI is about teaching the machine to learn how we learn – to learn from data.”

The development of AI will cause major shifts in how companies process and report information - it will move from data that comes in periodically, with occasional errors, to data that flows continuously and is more trustworthy - and accountants are in a position to facilitate that transition.

The shift isn’t limited to financial information, either, Katsnelson noted. All kinds of information and processes are open to artificial intelligence, from smart electric meters that can learn usage patterns to elevators that can recognize when they’re about to need repairs.

He went on to cite a host of examples of major investments in artificial intelligence and cognitive computing, from the Big Four accounting firms to IBM and the government of China. “Google is now saying it’s an AI company, not a search company,” he explained, and quoted Kevin Kelly, founder of Wired magazine: “The business plans of the next 10,000 startups are easy to forecast: Take X and add AI.”

AI and accounting

The importance of data and AI to client businesses alone would be enough to recommend it to accountants, but it also promises to revolutionize much of what they do themselves - starting with their core services.

“Most people think audit is the first field in accounting that will benefit from AI,” Katsnelson said. “It allows auditors to dig deeper into the data by processing much larger volumes of data. Machines are much better than auditors at processing huge amounts of data.”

AI can also process, analyze and incorporate all sorts of structured and unstructured data and information that auditors can’t - and it will be able to consider all the available data, without the need for sampling. “With AI and machines, you won’t need to sample – the machine can check all the transactions, which human auditors couldn’t,” Katsnelson explained. “That’s where the power of the machine is.”

With that said, Katsnelson still sees a critical role for accountants. “I don’t believe for a second that the auditors will be replaced by machines – the human touch, and human thinking, are critical,” he said. “Human judgment is still paramount.”

To operate at its best, though, that judgment will need the sort of data science skills Katsnelson described, and accountants will want to make sure that they’re ready and able to leverage the opportunities that artificial intelligence, cognitive computing and machine learning offer.

“What can AI do? Just about anything. Where can you apply it? Just about anywhere,” he explained. “You want to be on the right side of the waves of change – the side where the innovation takes place.”